(For full coverage of North Korea, click [ID:nSP525165])

* North Korea may fire intermediate range missile

* Four surface-to-ship missiles fired into sea

* U.S. says Thursday's missiles not helpful

By Jack Kim

SEOUL, July 3 (Reuters) - North Korea may test mid-range missiles or fire more short-range missiles to step up sabre rattling that has raised regional tension, a South Korean daily said on Friday.

The North fired four short-range missiles on Thursday, which follows a rocket launch in April that boosted its long-range missile capability and a nuclear test on May 25 that put it closer to having a working atomic bomb.

"Their behavior continues to be unpredictable, although the activity we've seen today was not unexpected," Pentagon spokesman Bryan Whitman said.

South Korea's JoongAng Ilbo newspaper said more test firings could be on the way.

" ... as a military demonstration for external purposes, there is a possibility of additional medium or short-range missile launches, so we're close observing the situation," it quoted a military official in the South as saying.

The North often times its short-range missiles launches with periods of diplomatic friction and on Thursday Philip Goldberg, the U.S. envoy who coordinates sanctions against the North, was in China to enlist Beijing's help in getting tougher with North Korea. [ID:nSEO208700]

China is the North's biggest benefactor and trade partner whose help would be essential for an effective sanctions regime, analysts said. [ID:nPEK49793]

Asian investors have grown used to North Korea's military moves and tend not to be fazed. The won <KRW=> was down early on Friday against the dollar as the missile launch weighed on sentiment.

In early Friday stock trading, some defence related issues were up led by Victek <065450.KQ>, a parts maker of military equipment, which rose 7.14 percent.

"North Korea's firing of short-range missiles is another negative, though I do not expect a drastic windfall in shares for that," said Choi Seong-lak, a market analyst at SK Securities.

Japan also had little reaction to the launches.

"We don't think they have caused major problems for our security," Chief Cabinet Secretary Takeo Kawamura told a news conference on Friday.

BUILDING SUPPORT AT HOME

Officials said the North's military grandstanding was likely related to moves by its leadership to begin readying leader Kim Jong-il's youngest son as a heir in the communist dynasty by consolidating the 67-year-old leader's power base.

The salvo on Thursday started with two surface-to-ship missiles fired off North Korea's east coast that flew about 100 km (60 miles) and splashed into the sea, a South Korean defence official said.

(For a factbox on North Korea's missile arsenal, please click on [ID:nSEO94899])

A third short-range missile was also fired, the defence ministry said, and South Korea's Yonhap news agency, citing officials in Seoul, later said a fourth followed.

North Korea has warned shipping to keep away from a maritime zone extending 110 km (68 miles) off its east coast between June 25 and July 10, saying it was conducting a military drill.

In Washington, State Department spokesman Ian Kelly called the latest missile firings "not helpful" and "dangerous."

North Korea has defied U.N. sanctions and threatened to launch an intercontinental ballistic missile unless the Security Council withdraws pervious resolutions and apologises for them.

Thursday's missile was a reminder that the North remains poised to launch its long-range ballistic missile, Bruce Klingner of the Washington-based Heritage Foundation said.

"North Korea could instead choose to launch Scud short-range ballistic missiles or No Dong (Rodong) intermediate-range ballistic missiles with little preparation since they are mobile systems."

The Scuds have a range of more than 300 km (185 miles) and the Rodong missiles can fly as far as 1,000 km. (620 miles). (Additional reporting by Andrew Gray in Washington and Jungyoun Park in Seoul; Editing by David Fox)

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